Author: Dave Meyer

Dave Meyer is the Director of LCFS Programs. Dave leads a team that is focused on expanding the company's presence in the LCFS market.

Maximizing your earnings: Navigating the Canadian Clean Fuel Regulation as a credit creator

As organizations’ and government entities’ net-zero goal timelines inch closer year after year, it is becoming increasingly crucial that new and immediate steps are taken to reduce greenhouse gas emissions (GHG). One key measure that is becoming more popular is the implementation of state and national Clean Fuel Standard (CFS) programs. By design, these initiatives intend to reduce the carbon intensity (CI) of the fuel pools in a given market, while offering financial incentives to companies that take action to reduce their transportation-related emissions.

So far, we have seen these programs launch in British Columbia, California, Oregon, and Washington, with Canada recently adopting their own standard which comes into force in July 2023.  

With the transportation industry now surpassing the power sector as the largest emitter of GHG emissions in the United States, it’s no wonder many new CFS programs are being launched across North America at a rapid pace.

What are the Canadian Clean Fuel Regulations (CFR)?

The Canadian Clean Fuel Regulations (CFR), released last year, will come into full effect by regulating fuel suppliers beginning July 1, 2023. The CFR represents one part of Canada’s nationwide effort to reduce GHG emissions to combat climate change. Like other CFS programs, the regulations aim to reduce the life cycle CI of transportation fuels and promote cleaner fuel alternatives.

The regulations set CI standards for gasoline and diesel and require fuel producers and importers to reduce the CI of their fuels to meet annual thresholds over time. The primary goal of the Canadian CFR is to reduce the average carbon intensity of gasoline and diesel consumed in Canada by 15% (below 2016 baseline levels) by 2030, which is anticipated to avoid 26 million tonnes of GHG emissions.

Suppliers unable to hit the outlined annual thresholds will generate deficits and be required to procure compliance credits from other regulated organizations or voluntary participants who generate credits by supplying low-carbon fuels or utilizing lower-carbon alternatives, such as electricity or hydrogen. Revenue earned from the sale of compliance credits by certain voluntary participants must be used to fund further decarbonization activities, such as deploying electric vehicle (EV) charging infrastructure, installing electricity distribution infrastructure that supports EV charging, or providing financial incentives for consumers to purchase EVs. Even where this is not explicitly required, the CFR program is designed to provide money to the entities responsible for growing the market for low-carbon fuels across Canada. This cycle of incentive and reinvestment aims to rapidly expand the clean fuel industry for businesses and consumers alike.

Who are eligible credit creators under the Canadian CFR? 

Parties who undertake credit generation activities are referred to as Registered Creators. Registered Creators can generate credits under three unique compliance categories. First, fossil fuel producers can earn credits for projects that reduce emissions from the fuel production process. Second, credits can be generated by producers or importers of low-CI fuels like ethanol and biodiesel. Third, and perhaps the most enticing to the vast majority, credits can be generated by those who supply low-CI fuels directly to vehicles, thereby encouraging the adoption of technologies like EVs and hydrogen fuel cell vehicles.

There are three main groupings for Registered Creators under this third compliance category: 1) electric vehicle (EV) charging network operators, for public or residential metered EV charging; 2) charging site hosts, who operate privately held commercial charging; and 3) clean alternative fueling stations, such as hydrogen.

Once registered and approved as a Registered Creator, these operations can begin generating credits on an annual basis. These credits are later sold on the open market for purchase by deficit generators who have an annual compliance target. To earn credits, organizations must demonstrate that their clean fuel projects meet the eligibility criteria set out in the regulations, comply with reporting requirements, and may be subject to verification by an independent third party.

By promoting and incentivizing low-carbon technology, the Canadian CFR looks to create permanent jobs in clean technology, promote the expansion of EVs, and grow Canada’s clean fuel industry.

How can 3Degrees help?

3Degrees works with fleet operators, EV charging infrastructure providers, and alternative fueling suppliers to quantify and monetize their transportation-related emissions reductions. Our unique three-phase process ensures that your organization maximizes the financial benefit of your current assets while providing a foundation for future growth.

  • Phase 1: Planning and Opportunity Assessment

3Degrees will work hand in hand with your team to identify all eligible activities under the Canadian CFR, appraise credit value, and manage the application and approval process.

  • Phase 2: Quality Assurance and Data Oversight

After approval is received, 3Degrees will oversee all data and reporting to meet all requirements and deadlines.

  • Phase 3: Credit Monetization and Risk Management

We will then look to mitigate any market risk your organization may face by arranging custom offtake arrangements.

How to get started

If your organization is interested in taking advantage of the new Canadian CFR as a credit generator, now is a great time to consider beginning the process.

We understand that the process to get started as a credit creator can be daunting, which is why we offer complimentary evaluations to help navigate any confusion and determine what opportunities are available to you as well as what that financial reward may look like. If you are ready to get started or for more information, please contact us here.

Transportation incentive programs are catalyzing emissions reductions across North America

No industry can escape transportation-related emissions. When it comes to climate impacts, the transportation sector simultaneously has the most room for improvement and is the best equipped to decarbonize. The proliferation of electrification and lower carbon fuels, particularly in regions with incentive-based programs in place, is helping to drive drastic emissions reductions from the transportation sector.

Local, state, and federal transportation incentive structures are taking shape across North America, and like any other market-based program, the prices and rules governing them can change rapidly. For example, at the recent Argus North American Biofuels, LCFS & Carbon Markets Summit that took place in Monterey, CA earlier this month, California Air Resources Board (CARB) officials affirmed they are set to increase the stringency of the state’s program known as the Low Carbon Fuel Standard or LCFS to at least a 25% reduction (from 20%) by 2030.

A Sea Change in Regulation

Right now, we are seeing a surge of regulatory change happening across all programs, and a race to set (and achieve) the biggest reduction in the shortest amount of time. British Columbia’s LCFS (BC-LCFS) requires fuel suppliers to progressively decrease the average carbon intensity (CI) of the fuels they supply to users, and their target has continued to rise over time. 

Recently B.C. announced that its suppliers must deliver a reduction of 30% by 2030—which is currently higher than California’s LCFS target. Prior to this expansion, B.C. had established a 20% CI reduction goal, in alignment with California’s targets. Next-door neighbor, Washington, is in the process of finalizing its own rigorous set of clean fuel standards. Healthy competition in transport GHG reductions is only becoming stronger as municipalities advance their CFP programs.  

In this blog, we’ll provide a brief summary of transportation market trends, regulation updates, and emerging news surrounding low carbon and alternative fuels.

California: Low Carbon Fuel Standard 

Pricing: LCFS Credits have been trading between $75 and $100 for the past several months, with a couple of slow cycles between those bounds. The forward curve of the market has moved into contango, meaning market participants expect credit prices to be higher in the future, after being backwardated for several years.

Regulation: California is continuing to lead the nation and planet, in many ways, in state-instituted transportation emissions reduction policy. CARB has been busy, having recently announced its commitment to 100% new zero-emission vehicle sales by 2035 and now finalizing its annual scoping plan that will outline the state’s pathway for achieving its greenhouse gas reduction targets, including achieving carbon neutrality by 2045. In the meantime, Governor Newsom has intervened in the process by providing direction to CARB and the state’s legislature to increase greenhouse gas reduction targets. CARB has indicated that it will begin a formal rulemaking process to update the LCFS once the Scoping Plan process is complete, with rules expected to take effect in 2024. This rulemaking will likely include raising the 2030 CI reduction target and providing longer-term targets past 2030.

Oregon: Clean Fuels Program

Pricing: After trending down with California, the Oregon market has begun to rebound after DEQ released data showing a net program deficit in Q1 2022. Credit prices in Oregon are currently around $120.

Regulation: Oregon’s Department of Environmental Quality (DEQ) is wrapping up a series of revisions to its Clean Fuels Program (CFP) following Governor Brown’s 2021 Executive Order (EO 20-04) directing the extension and expansion of the CFP. 

DEQ closed the final comment period for the draft rule in late July, which extends the program through 2035 and sets CI reduction targets of 20% by 2030 and 37% by 2035. Other proposed changes include adding new credit generation opportunities and clarifying the primary entity eligible to generate credits for different technologies. 

The DEQ met on Friday, September 23 to present proposed rules to expand the CFP’s CI reduction requirements beyond the currently adopted 10% reduction in average CI by 2025. The regulation was passed by commissioners making it the deepest CI reduction target of any state in the country.

Washington State: Clean Fuel Standard

Washington has entered the formal rulemaking to implement its Clean Fuel Standard (CFS) at the direction of a 2021 bill that called on a program to be in place by January 1, 2023, to reduce the CI of transportation fuels used in the state to 20% below 2017 levels by 2038. The program adopts many of the provisions of the Oregon CFP along with allowing infrastructure credit generation like California.

British Columbia 

BC-LCFS was updated by the Low Carbon Fuels Act, which was signed into law on June 2, 2022. British Columbia’s Ministry of Energy, Mines, and Low Carbon Innovation plans to issue the primary set of regulations during 2023 that would be effective on January 1, 2024. The new law sets up the LCFS to be in effect through 2030 and beyond by improving clarity, strengthening administrative provisions, and enabling additional GHG reductions, including increasing the reduction target to 30% by 2030 from the current target of 20%


By 2030, the Program is set to decrease the CI of transportation fuels used in Canada by 15% compared to 2016 levels and is expected to reduce GHG emissions by 26 million tons. The program similarly establishes a credit market that allows obligated entities to meet the CI target by taking actions to reduce the lifecycle emissions of fossil fuels, supply low-carbon fuels to conventional vehicles, or supply low-carbon fuels to alternative technology vehicles (e.g. EVs).

Stay Up to Date

​​It can be challenging to stay on top of the latest regulations and policy changes concerning the transportation sector, which is exactly why we created our market report. To have these updates delivered to your inbox, sign up for our transportation markets quarterly newsletter.

Clean hydrogen for heavy-duty transportation decarbonization

Hydrogen has the potential to make significant contributions to transportation decarbonization, especially in heavy-duty vehicle applications. However, there is some disagreement on the best, most environmentally conscious ways to produce and use hydrogen as a fuel. As we discussed in part one of our blog series, the energy efficiency and climate impact of hydrogen fuel hinges on the feedstock and source of the electricity used in the production process. Hydrogen’s wide range in carbon intensity is attributable to the number of production pathways and processing technologies that exist. Pathways such as coal gasification, fossil methane SMR, and electrolysis–using a grid mix or renewables–each have their own range of GHG emissions because of unique feedstock extraction and hydrogen fuel conversion practices.

Regardless of source, hydrogen is a strong alternative fuel option as it can be used in fuel cell electric vehicles (FCEVs), which are electric vehicles that combine a hydrogen fuel cell and a motor. Electricity is generated by combining hydrogen with oxygen from the air. This power generation is performed inside the fuel cell and does not release any harmful emissions—just clean water and heat.

Fueling time and driving range are two distinguishing factors that set FCEVs apart from other electric vehicles. It takes about 5 minutes to fill a hydrogen tank, and when full, the tank’s range is similar to that of a standard internal combustion engine vehicle [1]. Because fuel cells are 2-3 times as efficient as internal combustion engines [2], one kilogram (kg) of hydrogen, which contains roughly the same amount of energy as a gallon of gasoline, can power a car for about 60 miles, while one gallon of gasoline sustains about 25 miles of travel. Fuel cells also make vehicles quieter and permit longer travel distance with fewer refueling requirements. 

Opportunities and Challenges 

Today, hydrogen is about $13/kg and is becoming more affordable with technological advancements and infrastructure expansion. To fully achieve hydrogen’s capacity to decarbonize, it will be important to scale up technologies in key sectors, encourage innovation in hydrogen pathways, continue research and development for cost reduction, and develop industry-wide hydrogen standards.

Hydrogen fuel cells aren’t confined to road vehicles; the use of hydrogen fuel cell forklifts for material handling applications is increasing in popularity. There are roughly 35,000 hydrogen fuel cell forklifts currently in use in warehouses, stores and manufacturing facilities throughout the United States, compared to an estimated 9,000 FCEVs on the road [3].

Efficiency gains are the main value proposition for forklifts—with hydrogen it takes just a couple of minutes to recharge a whole fleet, while an electric forklift takes up valuable space in facilities and warehouses while charging. By moving from battery or propane forklifts to fuel cell forklifts, a company can shrink their carbon footprint and maximize the profitability of each square foot of the warehouse. The shorter refueling time made available through fuel cells means reduced operational downtime and more optimized supply chains.

Clean hydrogen has the potential to significantly reduce emissions from transport, especially in heavy-duty applications that have proven hard to decarbonize, such as long-range or utility vehicles, forklifts, buses, trucks, trains, maritime and aviation. Clean hydrogen fuel can help to catalyze electric mobility in large fleets where battery-electric options are in short supply. 

With hydrogen, we see the same chicken and egg issue as previously mentioned with national EV infrastructure. Hydrogen production requires a large, centralized operation and therefore production sites are sporadic across the western United States. Similarly, FCEV availability is limited to areas with an adequate number of hydrogen refueling stations.

Financial Incentives and Policy Support

California’s Low Carbon Fuel Standard (LCFS) is a major force for deploying zero emissions vehicle infrastructure, including hydrogen refueling infrastructure (HRI). The LCFS provides significant incentive value to lower the carbon intensity of hydrogen, and its infrastructure provision allows credits to be generated from deploying HRI capacity. HRI credits are issued according to a number of inputs, including capacity of a station, station availability or up time, as well as the carbon intensity of the hydrogen dispensed. These credits incentivize infrastructure roll out by ensuring hydrogen stations generate a minimum number of LCFS credits. As the station dispenses more hydrogen, the number of infrastructure credits it generates are reduced and credits from the fuel increase.

Program rules dictate how renewable electricity supply in the form of renewable energy certificates (RECs) can be used to reduce the carbon intensity of hydrogen production. To qualify, RECs must have been generated within three quarters of the hydrogen production, be located on the same grid, meet California’s RPS eligibility rules, and not be counted toward any other voluntary or compliance program. RECs are used across the country to track, transact, and consume renewable electricity on the shared grid while preventing double counting.

Oregon and Washington have similar programs to the LCFS that encourage renewable hydrogen deployment. However, Oregon has no hydrogen production facilities, so hydrogen is often sourced from California-based producers and transported to facilities in Oregon to power hydrogen fuel cell forklifts. Under the CFP, 3Degrees developed the very first hydrogen pathway to generate credits and has issued 100% of the hydrogen credits issued under the Oregon CFP to date.

In addition to the current incentives under the LCFS, the California Air Resources Board (CARB) recently proposed the extension of HRI provisions to support hydrogen refueling infrastructure for medium- and heavy-duty vehicles. While this proposal is not finalized and is not guaranteed to be adopted, it could spur significant uptake of these vehicles, as most observers agree the greatest opportunities for FCEVs are in heavy-duty vehicles. Major advancement opportunities for hydrogen fuels exist in the trucking, shipping and handling, and manufacturing industries. Hydrogen will be key to meeting climate goals, but the high cost of ownership and shortage of infrastructure are obstacles that delay full deployment. Through policy support, technological innovation, and financial investment, hydrogen can be utilized at scale.

How We Help

For organizations exploring ways to accelerate the shift to low-carbon transportation, participating in clean fuels programs offers a path to access lucrative incentives for lower carbon initiatives to reduce the total cost of ownership of zero emissions vehicles and help finance a full transition. Earning credits can help cover the cost of hydrogen projects, but configuring transactions to get value for them is not an easy task. Meeting qualifications for these programs can be challenging—the hydrogen itself must meet a certain level of renewable content to be eligible for each program and there is a whole range of record keeping and monitoring requirements.

Working with an advisor alleviates the administrative burden and can help businesses recognize the highest possible value for participating in these programs. 3Degrees can help your organization reduce its transportation emissions by enabling a cost-competitive transition to zero emissions vehicles. To learn more about our transportation offerings, please get in touch


  1. 5 Things To Know When Filling Up Your Fuel Cell Electric Vehicle. U.S. Department of Energy, 2016.
  2. Hydrogen’s Role in Transportation. U.S. Department of Energy, 2022.
  3. Hydrogen and Fuel Cell Technologies Office Overview. U.S. Department of Energy, 2021.

Hydrogen production: exploring the various methods and climate impact

Hydrogen refueling station

Hydrogen has been receiving growing attention in recent years, especially in the transportation sector, for its potential to significantly reduce greenhouse gas (GHG) emissions from trucks, buses, planes, ships and other modes of transit.

Hydrogen is a naturally-occurring, plentiful element that is non-toxic and odorless. However, it does not occur in its elemental form on Earth and therefore must be generated from other hydrogen-containing sources. Roughly 96% of all hydrogen produced worldwide is generated using fossil fuels, with natural gas being the most common feedstock. [1] The cheapest and most standard way to produce hydrogen is through a thermal process called steam methane reforming (SMR). 

The hydrogen generated from natural gas using SMR is often referred to as “gray hydrogen.” A newer alternative to this conventional production method is electrolysis, whereby electricity is used to split water into hydrogen and oxygen. When electricity from renewable sources is used in the electrolysis process the product is often called “green hydrogen”. 

The vast majority of hydrogen produced today, regardless of its source, is used in the production of petrochemicals and ammonia —~94% of the hydrogen produced in 2018 was consumed by those industries. [2] However, low-carbon hydrogen has the potential to decarbonize a myriad of industries, including steel making [3], energy production [4] and storage, and transportation – both as a direct fuel and in the production of other low-carbon fuels. [5]

Hydrogen on the Color Wheel

Technological advancements and headlines around a product known as “green” or renewable hydrogen have been gaining serious attention in the last couple of years. The “green” color classification is typically assigned to hydrogen produced via electrolysis using low-carbon or renewable electricity inputs, such as wind, solar, or hydro power, inducing no or very low GHG emissions. Some will also apply this designation to hydrogen produced using biomethane as the feedstock, but this designation is less common. 

While there is an industry-wide agreement that green hydrogen will be necessary for deep decarbonization, there is not an agreed definition against which it can be verified or validated. Electrolytic hydrogen that is produced with default grid electricity is not “green” because our electric grid contains shares of fossil electricity. The key is ensuring that the electricity used to produce hydrogen is renewable. 

Color classification of hydrogen fuel

In determining total lifecycle emissions associated with hydrogen used in vehicles, the emissions associated with the feedstock – electricity in the case of green hydrogen – must be considered. These lifecycle emissions are often calculated as carbon intensity (CI), or the emissions per unit energy of fuel. Reducing the CI of hydrogen produced via electrolysis requires using lower-carbon sources of electricity.

Hydrogen can be produced through several processes that have historically been represented via a spectrum of hydrogen color classifications, including blue, yellow and pink. Blue hydrogen is essentially gray hydrogen produced via SMR that utilizes carbon capture and storage technology to trap the associated greenhouse gas emissions. Pink, red and purple are common colors referring to hydrogen generated via electrolysis where the power comes from nuclear resources, while yellow is a newer phrase for solar-powered electrolytic hydrogen.

Reframing hydrogen classifications

While in the recent past hydrogen has been classified through this color framework, policymakers are finding it more useful to think about the fuel from a carbon intensity perspective on a lifecycle emissions basis to more fully capture the nuances in how hydrogen can be produced. For example, hydrogen produced from renewable natural gas (RNG) does not neatly fit into any of the above colors, but has significantly lower lifecycle emissions due to avoided methane emissions. In addition, roughly 50-55 kWh of electricity is required to produce 1 kg of hydrogen through electrolysis and the source of the energy used to drive this electrolysis has the potential to impact the CI score. Using a mix of on-site renewables and grid electricity or using electricity from a cleaner grid will result in lower-carbon hydrogen, but these differences are not easily captured in the hydrogen color scheme.

For electrolytic hydrogen, there are also considerations related to whether the electricity is produced onsite or taken from the grid and whether it is used during on-peak or off-peak times that are critical to ensuring the production does not worsen overall electricity emissions or grid resiliency. 

To develop hydrogen sustainably, producers can avoid exacerbating grid peaks, procure excess renewable energy that would otherwise be curtailed, and ensure new renewables are placed on the grid. It’s hard to prove that clean energy was physically delivered to the electrolyzer, or that the power used in electrolysis was zero-carbon. Producers of electrolytic hydrogen do not always have access to renewable resources nearby. As a result, showing that hydrogen production is low carbon and aligned with deep decarbonization remains a difficult challenge to overcome. 

Hydrogen fuel has the potential to drastically decarbonize the transport sector, but up until this point, cost and infrastructure roll out have been consistent barriers. Effective clean fuel policy-making will likely catalyze the production of hydrogen as a viable fuel alternative. With greater availability comes more consumer uptake, resulting in more competitive market prices. Additionally, incentives that reward FCEV purchases  will help spur the number of early adopters. Market-based incentive programs — like the LCFS and Oregon’s Clean Fuels Program — exist with the goal of making alternative fuels like hydrogen more economical and competitive. 

In the second part of this two-part blog series coming next month, we will explore hydrogen’s role in helping to create a zero emission transportation sector, as well as the incentives and policies that aim to accelerate the clean transition. Visit our service page to learn about more transportation decarbonization solutions.


1. The Future of Hydrogen. International Energy Agency, 2019. 
2.The Future of Hydrogen.
International Energy Agency, 2019. 
3. Can Industry Decarbonize Steelmaking? Chemical & Engineering News, 2021.
4. Hydrogen Energy Storage. Energy Storage Association, 2021. 
5. Biodiesel and Other Renewable Diesel Fuels. National Renewable Energy Laboratory, 2006. 

EV charging infrastructure credits are speeding up the transition to clean transportation

EV charging

Widespread adoption of zero-emissions vehicles (ZEVs) could assist many regions in achieving robust greenhouse gas mitigation goals. Government mandates, market-based incentive programs, and innovative technologies have been building momentum, and the transportation sector seems to have reached a tipping point. To meet its ambitious targets, the United States needs a solid suite of electric vehicle (EV) charging and refueling infrastructure. So far, California is the leading state in the deployment of EVs, and has set aggressive climate goals. By 2025, the state hopes to have adequate infrastructure to support 1.5 million ZEVs, and provide 250,000 battery EV chargers.


Clean transportation is developing nationwide, but is particularly present in California due to both the proliferation of EV charging infrastructure and the availability of EV purchase incentives. There is wide agreement that the availability of clean energy infrastructure is required to enable wide-scale EV adoption. To further catalyze the rapid expansion of EV charging stations in California, a ZEV infrastructure crediting provision was added to the state’s Low Carbon Fuel Standard (LCFS) in 2018. 

While most credits generated under the LCFS are related to fuel dispensed, the infrastructure provisions enable entities to generate credits for available fueling capacity instead of actual fueling activity. The infrastructure provision covers both Hydrogen Refueling Infrastructure (HRI) and Direct Current (DC) Fast Charging Infrastructure (FCI), also known as Level 3 chargers. 

Levels 1 and 2 charging use a universal connector that can be plugged into any EV, and the majority of consumer EV owners do their charging at home using Level 2 chargers, which are relatively slow and inexpensive. Most often, DC fast chargers — which charge an EV battery in about half an hour — can be found at commercial centers, or along major travel corridors. 

Fast charging provides the fastest available fill-up, but not every EV model is equipped for it. DC fast charging uses three different connector systems: CHAdeMO, CCS Combo, and Tesla Supercharger. When installing an EV infrastructure, it is important for station owners to consider the type of charger they offer. In some cases, the amount of possible FCI credits may be limited if only one charger type is available at a site. Understanding what variables to consider in an installation project will help your organization maximize its cost savings.


The infrastructure crediting provisions come from an attempt to solve a chicken-or-egg problem. While consumers want assurance that they will have access to charging stations in a variety of locations, infrastructure owners want to know demand will exist to drive utilization. The LCFS Charging Infrastructure crediting provisions ensure infrastructure owners are able to recoup their investments by providing a revenue stream for fueling stations based on the capacity made available, rather than the actual fuel dispensed. infrastructure crediting process

Incentivizing the expansion of charging infrastructure is critical during this early stage of ZEV adoption. As fueling activity increases, the number of credits generated under the infrastructure provision decreases, until eventually all of the credit activity is derived from actual fueling. Each site has a fueling capacity limit — the maximum is 1,200 kg/day for HRI stations, and between 2,500 kw for FCI stations, where each charger at the FCI station must have a nameplate capacity of between 50 kW and 350 kw. 

The HRI station’s fueling capacity is generated by studying factors such as time between fills, hourly distribution, and mass flow fueling rate. Crediting for HRI stations is based on 100% of the station capacity while FCI credit generation depends on charger capacity and covers 10-20% utilization. Infrastructure credits can be generated for five years at FCI stations and fifteen years at HRI stations.


There are limits to the number of facilities that can be approved by California Air Resources Board (CARB). As of November, 2021, there were 62 HRI stations and 1,314 FCI stations at a total of 259 sites across California. Applications for new stations can be accepted as long as the estimated potential HRI and FCI credits from all approved stations does not exceed 2.5% of LCFS deficits in the prior quarter. 

In addition to the global program requirements, individual stations must be publicly accessible 24 hours a day. An eligible station cannot have any gates or codes to access, and should not require any special training to be used, and the site must accept major credit and debit cards at the point of sale terminal. 

The application and documentation process can be complex and onerous. Fuel station owners must report fuel transactions on a quarterly basis to CARB, they must include cost and revenue data in their quarterly reports, and there are additional annual reporting requirements. With so many specific rules, infrastructure crediting can be difficult to navigate. Working with an advisor like 3Degrees can help alleviate the administrative burden of program participation while ensuring the highest possible return. For more information, please contact us here.

Market-based incentives for transportation: Driving down emissions while generating revenue through the LCFS


In 2016, transportation surpassed the power sector as the largest emitter of greenhouse gases in the U.S. Since then, reducing emissions from the transportation sector has become a policy priority.  As efforts to decarbonize transportation fuel emissions ramp up, so too does the development of market-based incentive programs and the regulatory frameworks to govern them.

California’s Low Carbon Fuel Standard (LCFS) is the most developed market-based incentive program, and it is successfully working to help reduce state-wide transportation emissions by incentivizing reductions in the carbon intensity (CI) of fuels used in the state. Other regions have created LCFS-like programs, or are considering adopting similar initiatives. Oregon and British Columbia, for example, have enacted clean fuel programs, and Washington and New York have proposed legislation for similar state-wide initiatives. The concept of a federal LCFS-like program has also been floated by several different stakeholders — specifically, the House Select Committee on Climate Crisis has recommended it in their congressional action plan. For these reasons and more, these types of market-based incentives are poised for continued growth and are likely to be adopted in many other regions across the country and around the world.


California created the LCFS in 2010 with an initial goal of reducing the CI transportation emissions by 10% by the year 2020; that goal was later updated in 2019 to target a 20% reduction by 2030. Administered by the California Air Resources Board (ARB), the LCFS rewards the use of fuels with a lower CI than conventional fossil fuels, in an effort to incentivize innovation in transportation fuel, reduce greenhouse gas (GHG) emissions, and improve the state’s air quality.


From extraction to combustion, the LCFS’s focus on CI covers all aspects of the transport fuels’ lifecycle. The state-mandated 20% reduction target applies to both producers and importers of transportation fuel sold or dispensed in California. By comparing their fuel’s CI to the state’s benchmark, entities generate either credits or deficits. Entities that produce or import fuels above the benchmark, such as gasoline or diesel, generate deficits. These deficits must be offset by credits, which can either be generated through the development of their own low-CI fuels or purchased from others who have generated credits for low-CI fuel distribution. Examples of low-CI fuels include ethanol, renewable diesel, natural gas, and electricity.

An LCFS credit is an environmental commodity that represents the use of a low-CI fuel in California. These credits are sold on the open market, so their value is dictated by standard market factors like supply and demand, and therefore fluctuates.

LCFS credit generating vehicles

Credits are issued in units of metric tonnes of CO2e based on the difference between the lifecycle emissions of the low-CI fuel and the annual CI target


Any organization with a transportation or operational footprint in California, or any other region with similar incentive programs in place, can benefit from the LCFS and should take advantage of the opportunity to help further decarbonize their fleets. 

California’s LCFS program incentivizes reducing transportation emissions by recognizing the value of low-CI transportation fuel. Electric vehicles can generate credits using grid power, however, using renewable power further increases LCFS credit generation. The use of renewable power can be from either on-site renewables or use of eligible renewable energy, including purchases of renewable energy certificates (RECs).  EV charging matched with renewable energy increases LCFS credit generation by >30% as compared to using  standard grid power. Over the past year the value of increased LCFS credit generation is about 3-4 times the cost of the REC. 

With few exceptions, the revenue generated from the LCFS by EVs must be reinvested into further EV adoption, and ARB requires annual reports to show how funds are spent.


LCFS compliance is uncharted territory for many organizations, as carbon accounting and state program administration is generally not a core function of many businesses. Credit generation and monetization involves knowing the regulatory and reporting requirements, as well as market participants and opportunities. To ensure your organization is maximizing the benefit from these programs — and doesn’t make any inadvertent missteps — third-party advisers can take on the administrative load from pathway eligibility and vehicle registration, quarterly and annual reporting, implementation of carbon intensity enhancements, and credit monetization.  

For organizations interested in leveraging the LCFS to reduce their transportation footprint and subsidize further transportation decarbonization within their California operations, a trusted advisor can offer many benefits, including:

  • Aggregating your organization’s credits to help realize a higher market price
  • Helping your organization gain access to eligible zero-CI green power to increase credit generation
  • Providing your organization with a network of corporate buyers to tap into to improve selling power.
  • Helping your organization mitigate regulatory risk by providing a deep understanding of the regulatory landscape, incentive changes, pricing trends, and custom credit sales agreements


If you’re interested in exploring LCFS programs, 3Degrees can help you navigate the process.